Li Deshui, director of the National Bureau of Statistics (NBS), warned
on Monday?about the acquisition of domestic businesses by
transnational corporations.
"We have been welcoming foreign investment but now we have to
curb any attempt to monopolize the Chinese market," said
Li,?also a member of the 10th National Committee of the
Chinese People's Political Consultative Conference (CPPCC),?which
is in its Fourth
Plenary?Session.
Foreign investment in China has shown new trends since 1995, Li
said. Transnational companies have launched a massive wave of
buying Chinese companies, especially those dominating a particular
sector or having significant potential for expansion.
More than 80 percent of China's supermarkets are in the hands of
transnational companies and a number of other sectors involving
beer and skin-care products are almost entirely monopolized by
foreign firms.
"Any sovereign state will not allow such a thing to happen,"
said Li.
Some countries have enacted laws forbidding business
acquisitions that would result in a monopoly being created. In
Canada merger and acquisition deals valued above US$200 million
need government approval. The US government and Congress also set
requirements on business acquisitions by foreign companies.
"If we allow hostile takeovers to happen without limitations we
will gradually lose our domestic brands and capability to
innovate," said Li.
The consequence, he said, is that China may become just a link
in international marketplaces and receive the smallest percentage
of any profits.?Most corporate profits would be diverted away
from China by transnational companies, leaving the country with
only nominal GDP figures.
Premier Wen
Jiabao has mentioned in his government work report, delivered
on March 5 to nearly 3,000 deputies?to the National People's
Congress (NPC),
that?to open further to the outside world the country must
"pay particular attention to safeguarding China's economic
security."
"The new circumstances require us to constantly improve on our
level of opening-up and also gradually improve our polices on using
foreign investment," said Li.
"Laws and regulations on business acquisitions by foreign
companies should be approved as quickly as possible in line with
international practices," he said. "There should be severe measures
to curb and even punish hostile takeovers aiming to monopolize
segments of the Chinese market."
(Xinhua News Agency March 8, 2006)